Over the past months with the Euro crisis looming, everyone has believed that the German economy is strong and that Germany would be able to (or have to) support the Euro in order to prevent its collapse. One got the impression that the Bundesbank was stuffed so full of money that nothing could go wrong, at least as far as Germany is concerned.
But is this true?
The German government debt as a percentage of GDP is in excess of 80%, not significantly less than that of Spain. The prime minister of Luxembourg, where the ratio is a mere 20%, has said that he thinks that the level of German debt is troubling.
Yesterday, the German Government tried to sell €6 billion of government bonds but were left with some €2.35 billion unsold. Whether this was because investors were not prepared to buy them, or Germany was not prepared to pay higher interest rates is unclear, but what does seem to be clear is that investors are steering clear of the Euro. It has also become apparent that, far from the Bundesbank being stuffed with money, Germany is also borrowing billions to make ends meet. In cash terms, rather than as a percentage of GDP, Germany's indebtedness is probably the highest in the Eurozone.
Details are here (Der Spiegel):
Or if you hold any Euro banknotes, perhaps you should consider this, from today's Telegraph